2022 may in fact be a year for significant California workers’ comp reforms. The last major reforms were a decade ago, in 2012, under Governor Brown.
Inflation continues to eat at permanent disability awards and settlements. California injured workers have not received a PD indemnity increase since 2013.
Discussions are taking place quietly, but a clue to the seriousness of the reform effort can be seen in the Assembly Floor Analysis of AB-2848 (Santiago) which states the following:
“SB 1160 (Mendoza), Chapter 868, Statutes of 2016, required DWC to commission a report evaluating the impact of timely medical treatment on the workers’ compensation system by reviewing claims filed between January 1, 2017, and January 1, 2019, due to the Legislature before January 1, 2020. It is unclear whether such a report was ever commissioned. This bill requires a new or updated report for claims filed between January 1, 2017, and January 1, 2021, due to the Legislature before July 1, 2023. However, according to information provided by the author, this bill will likely be amended in the Senate to be a larger workers’ compensation reform package. The amendments will have the goal of raising permanent disability benefits, minimizing delays associated with medical treatment requests, and reducing frictional costs within the workers’ compensation system.” (emphasis added)
So what will be the frame of the negotiations? Injured workers, applicant attorneys and many labor advocates believe that workers already have given up substantial rights in prior reforms. Those “take aways” included the right to freely choose a treating physician, limitations on QME selection, and restrictions on medical treatment through the MPN and UR/IMR processes and the pharma formulary. While those legislative and regulatory reforms have helped control comp costs in California and squeezed some of the excesses out of the California system, they have led to enhanced frictional costs and high loss expense ratios.
The savings achieved through the 2012 reforms far exceeded projections. So, it can be argued, workers should not have to give up much this go round.
However, employers and insurers in California continue to present a very organized and disciplined front. A PD increase seems unlikely unless there are sweeteners for the employers and insurers.
What might those be?
Reduction or elimination of the voucher (the $6,000 SJDB which is the surviving remnant of vocational rehabilitation in the California system)? Reform of the Subsequent Injuries Benefits Trust Fund (SIBTF)? Changes to the QME process to streamline QME selection? Changes to the way cumulative trauma claims are handled in California? Yet another revision of the Medical-Legal Fee Schedule?
Some of these changes are on a holy grail list for the employer community while sacrosanct for worker advocates.
Where’s the sweet spot? What is in play? Are there ways to make the system more fair, adequate, prompt and equitable?